European Phone Stocks May Extend Gains, Technical Analysts Say

Phone companies, Europe's best performing stocks in the last three months, will widen their lead, according to analysts who monitor price charts to predict moves.

The Dow Jones Stoxx 600 Telecommunications Index on Oct. 11 rose above its five-year ``trend line'' after Telefonica SA, Spain's largest phone company, forecast faster profit growth. The line is formed by uniting an index's highest points in a given period and is used by technical analysts to forecast direction.

``There is good momentum in the telecommunications sector,'' said Eric Lanteigne, a technical analyst at Collins Stewart in London. ``It's gaining at the right speed right now. We can expect great things for this sector in the next 18 months or so.''

The advance this month has resulted in a steeper trend line that may push the index above 400 by year-end, the chart shows. The previous five-year trend would have kept the index below 380. Stoxx 600 phone stocks have rallied 19 percent since the start of August, when the index topped the 200-day moving average line.

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